232,456 workers withdrew N76bn pension funds after job loss —PenCom

NIKE POPOOLA

The high rate of job losses in the country is raising the demand by workers under the Contributory Pension Scheme to withdraw 25 per cent of the balances in their Retirement Savings Accounts with their Pension Fund Administrators, investigation has revealed.

According to figures obtained by our correspondent from the National Pension Commission, while 150,000 job losers withdrew N48bn as of the end of February 2016, no fewer than 232,456 affected workers had withdrawn N76.03bn at the end of September 2017.

From the figures, 10,058, 13,337 and 16,165 job losers withdrew N3.97bn, N5.17bn and N5bn respectively in the first, second and third quarters of 2017.

It was discovered that more job losers were looking up to their RSAs savings as their last financial hope, which was making them unable to wait until retirement stage before touching their savings.

One of the pension operators, who spoke to our correspondent, said the rise in demand for the money was reducing the funds available to the PFAs for investment.

The commission revealed that at the end of the 2013 financial period, only 36,369 sacked workers with N29.8bn as their RSA balance in both the public and private sector withdrew N7.4bn from their various PFAs.

During this period, workers who resigned from their workplaces for various reasons were not allowed to access the funds.

Only those who could produce their sack letters from their employers and had waited for at least six months without getting another job were allowed to apply for a quarter of their RSA balance.

After the Pension Reform Act was amended in 2014, the law softened the pedal and allowed those who also resigned to access the funds after waiting for four months.

Section 7 (2) of the PRA 2014 allows a worker who voluntarily retires, resigns or was disengaged from employment to access 25 per cent of his RSA if he is unable to get another job after four months.

By the end of 2014, the number of contributors who withdrew from their RSA rose to 96,708. Out of these workers, 92,245 were from the private sector while 4,463 were public workers. With a total contribution of N126.4bn in their pension accounts, they withdrew N31.6bn at the end of 2014.

The Pension Reform Act 2014 provides that an employee, who is disengaged from employment before the age of 50 years and is unable to secure another employment within four months of such disengagement, may make a withdrawal of not more than 25 per cent from his RSA.

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